Economic Distress Index

A county-level measure of economic distress based on seven indicators.

Methodology

The index combines seven indicators into a single, comparative measure of economic well-being. The index is constructed from the U.S. Census Bureau’s American Community Survey (ACS) 5-Year Estimates and County Business Patterns (CBP) datasets. Table 1 contains the seven indicators along with their descriptions and sources.

Figure 1: Economic Distress Indicators and Descriptions

These seven indicators are individually normalized across 105 counties on a scale of 0 to 100, where 100 represents the most distressed county and 0 represents the least distressed county. The individual indicators are normalized using the following formula:

\[Index~Indicator_{ij} =\frac{X_{ij}~-~min_{(of~105)}{X_i}}{max _{(of~105)}X_i~-~min_{(of~105)}X_i}*100 \]

where 𝑋𝑖𝑗 is the value of indicator 𝑖 for county 𝑗.

In most cases, higher values represent greater distress; however, for the median income ratio, change in employment, and change in establishments, lower values indicate greater distress. Therefore, normalization requires a slightly different formula:

\[Index~Indicator_{ij} =\frac{min_{(of~105)}{X_i}~-~X_{ij}}{max _{(of~105)}X_i~-~min_{(of~105)}X_i}*100 \]

The final index value results from taking the geometric mean of the seven indicators. To handle the zeros, one is added to each normalized indicator; therefore, one is then subtracted from the calculated mean.

Figure 1: Economic Distress Index for Kansas Counties

Figure 2: Economic Distress Index for Kansas Counties

Table 2: Distress Indicators and Quartiles by County
(1st Quartile = Least Distressed, 4th Quartile = Most Distressed)

Figure 3: Distress Indicators and Quartiles by County
(1st Quartile = Least Distressed, 4th Quartile = Most Distressed)